Level the Playing Field: Providing All Americans with Tools to Earn Financial Security Justin King July 21, 2012

Overview Thank You! Who is this guy? What are we doing here? We have a savings problem. Our government makes it worse. We can make it better. Tips and tricks for effectively communicating with your audience.

Our National Savings Problem Saving is fundamentally important. Savings Prevent Hardship When work is interrupted, 40% of liquid-asset poor families report hardship compared to 20% of families with liquid assets. It Doesn’t Take Much To Make a Difference Even amounts below $2,000 have been shown to reduce the likelihood of missing meals or rent payments when income is interrupted.

The Bad News Vast numbers of Americans live paycheck to paycheck. Liquid Asset Poverty— Lacking enough savings to live at the poverty line for 3 months without income. $4,632 for a family of three.

More Bad News These numbers are worse for hard working, low-income Americans. 68% of families in the bottom income quintile (the poorest 20%) are liquid asset poor. 47% of the next 20% up the income ladder are “liquid-asset poor.”

If You Think Savings Is Bad…

Why Does This Matter? 71% of children from low-income, high- saving households move up the economic ladder. 50% of children for low-saving, low income households moved up. Children who want to go to college and have savings in their name are more likely to go. How much more likely? As much as 7x Because savings matter. They don’t just keep you out of a hole. They help you get ahead.

Government Supports Savings… $548 billion in $750 billion in 2006, according to the tax policy center. Money goes to support: homeownership retirement savings college access Unfortunately…

Mostly For Upper Income Americans The Mortgage Interest Tax Deduction

Retirement Savings Also skews to the rich, and costs $165 billion/year.

Finally, Some Good News WE CAN DO SOMETHING ABOUT IT

The Opportunity Tax Reform Coming soon to a Congress near you. Tax reform will “close loopholes” and “lower the rates.” Our job is to add “Support Financial Security and Saving for All Americans”

Family Financial Security Act A proposal to level the playing field and support saving for all Americans. Use the tax form to create an opportunity for all Americans to build financial security. If they invest in their financial security, government will meet them halfway.

Family Financial Security Act The Details: Who is eligible? Up to the national median income What can they earn? A dollar for dollar match, up to $500, if they save Where can they save? Directly into a retirement savings account, a child’s 529 college savings account, or into a savings bond or certificate of deposit

Family Financial Security Act Why support savings this way? Using the tax form is a low-cost way to reach almost everyone, and people without accounts could open them right on the tax form. Families need to save for more than retirement, this flexible approach gives families the power to choose what is best for them. The Act is based on the SAVE USA program, a proven tool that shows that supporting savings can work for Americans at all income levels.

This Will Be Hard Questions You Will Face: 1.How much does this cost? 1.We spend $130 billion to support retirement savings for the wealthiest 20% of Americans. The FFSA only costs $4 billion each year. 2.We can’t afford new spending. 1.We don’t need new spending, we just need to redirect a fraction of hundreds of billions we already spend. 3.You want to give more money to people that don’t pay taxes? 1.I want all Americans to have the same opportunities to save and build financial security.

Talking About the Family Financial Security Act Instead of giving tax breaks to millionaires, the government can offer families tools to help them save and become financially secure. It makes better sense to help the average family buy a home, send their kids to college, and save for a secure retirement, than to give expensive tax breaks to people who don’t need them.

Talking About the Family Financial Security Act Words to Use: Economic Opportunity Financial Security Hard-working Families Earn Proven Tools Words to Avoid: Programs Poor/Poverty Provide/Give

Contact Information Justin King Asset Building Program New America Foundation